The not-so-hidden costs of absenteeism

Staff absenteeism, irrespective of the reason, is one of the single biggest challenges affecting companies today.

From the outset of the pandemic to the more recent spread of Omicron and its subvariants, businesses have experienced significant disruption from both mandated and unscheduled labour shortages: some workers are getting sick, others are being forced to quarantine or care for household members, and there are those that have simply opted to not return to the workplace. Everything from medical services, garbage collection, transport and logistics and education services to airlines has been interrupted.

Now that we are caught up in what is being referred to as the ‘third wave’, the soaring number of absent workers is adding to an already diminished workforce at an economic impact of approximately $15B per year. According to the Australian Bureau of Statistics (ABS), more than one in five (22 per cent) employing businesses have staff that are unavailable to work due to issues related to COVID-19, almost a third of employing businesses (31%) are having difficulty finding suitable staff and almost half of all businesses have experienced supply chain disruptions (47 per cent).

ABS Head of Industry Statistics, John Shepherd believes that the scale of the problem is not being fully captured by official figures. “Large businesses are three times as likely to report these absences (65 per cent) compared to small businesses (20 per cent),” he said.

Employers with public-facing workers, like schools and emergency service providers, appear to have had particularly large portions of their labour force isolate due to the virus. Education and health service employers are reporting a 25 to 47 per cent rate of sickness absence due to Covid while organisations in the category “other services”, which includes hairdressers, funeral staff, shoe repairers and church staff, reported an 18 to 39 per cent absence rate.

Hotels have reported shutting rooms, while restaurants have restricted bookings, reduced hours of service or had to close.

Supermarkets have reduced the range of products they sell to make life easier for their suppliers. In June 2022, the industries of retail trade (68%), accommodation and food services (64%) and wholesale trade (61%) had the highest proportion of businesses experiencing supply chain disruptions. There are now fears within the supermarket sector that some stores may be forced to shut or reduce their hours due to workers being unavailable.

Covid-related absences have also compounded staff shortages at airports and airlines, and the industry is struggling to recruit staff after thousands of jobs were lost and many workers left the during the pandemic.

An anomaly is the construction industry, which operates using tens of thousands of subcontractors and self-employed staff, many of whom work outdoors and are likely to avoid reporting Covid symptoms to protect their incomes.

The Australian Chamber of Commerce and Industry said employers are “doing their very best to maintain normal business operations” in the face of rising Covid infection rates and a general worsening of skills availability but warn that workforce shortages are holding back business and the economy.

This sentiment is echoed by BHP’s chief financial officer. David Lamont revealed that the largest company in Australia can’t find workers, and he says the situation is not unique to BHP.

“It is an Australia-wide problem, but it is not exclusive to Australia. And the flow-on effect is impacting everything,” said Lamont.

“In light of chronic workforce gaps, businesses have turned to existing employers to work additional hours where possible, reducing their operating capacity, or closing their doors entirely,” he said.

A disruption to staffing levels is not cheap, in any way shape, or form, as it drives up costs. While some companies/industries can simply make do with being an employee down, others cannot. Security companies need to have guards at client sites regardless of absent workers. Manufacturing companies must produce their quotas regardless of who is present or not. Patients need care, regardless of who is absent or not. More often than not, in order to deal with an absent worker without disrupting operations, employers will have to use overtime.

Studies show that co-workers are 29.5 per cent less productive when covering for absent employees. Take a long-term care facility as an example. If a caregiver is absent, other caregivers have to pick up extra patients. As you can imagine, more patients in the same amount of time likely results in poorer care provision, and a lack of time to perform other job duties outside of patient care.

In certain industries such as security or manufacturing, the effects of absenteeism on the workplace include increased accidents. If an employee is absent or even cognitively impaired due to illness, it can force underqualified employees to undertake tasks that put them at risk. Absenteeism also often leads to employees being overworked or burnt out, creating other workplace safety issues. Again, let’s examine healthcare. If a caregiver / nurse is frequently covering for a colleague, it should come as no shock that it could result in poor judgment and mistakes. Essentially, when employees are forced to deal with increased labour, it impacts the entire organisation.

And it goes without saying that profits decrease when output decreases. Companies struggling with limited staff, are likely to also struggle to maintain production/service levels. The less time a worker spends in the factory, the less output they can contribute. If this is ongoing, the output will be greatly affected.

Productivity losses means revenue losses – not just labour costs.

The effect of absenteeism is felt by individuals, teams, and the organisation as a whole. As a result, pressure is added to both productivity, profitability and safety, which often creates a vicious circle, causing more absenteeism.

Graham Gordon, CEO and Founder of Gardian and developer of the Federal Health-approved Gardian Covid screening program said there is a growing number of people being infected by Covid, and an even larger pool of people developing the symptoms of Long Covid.

“While we still have more to learn about BA.4 and BA.5 and any new variants that follow, we are acutely familiar with the multiple impacts of Covid to date and the continued need to reduce the spread of infection.

“While implementing all other reasonable control measures in a workplace, there is significant evidence that regular screening programs provide the only practicable solution for disrupting the chains of transmission and enabling companies to proactively redirect resources,” said Gordon.

Several forward-thinking Australian companies have already implemented either onsite Point of Care testing programs under the oversight of a trained healthcare professional or have their staff following a policy of repeatable and auditable at-home, self-testing using the easily downloadable Gardian Self Check app and Test Tracker management software that enables the results to be recorded and shared with the employer.

In addition to reliably monitoring SARS-CoV-2 transmission rates and severity, regular testing in conjunction with a system that enables real-time verification and reporting are key for the early identification of infectious COVID-19 cases, effectively allowing for their prompt isolation to protect other employees and the broader community.

There is no doubt that testing strategies help to mitigate the impact of Covid-19 in high-risk environments while ensuring that societies and economies can continue to function.

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